You are on the cusp of a major historical event: Tomorrow, Greece will likely miss a 1.7 billion euro payment on its sovereign debt. As a result, the country’s banks are now shut down, as is the stock market. The banking and financial holiday is set to last through this week, and probably longer.
A Greek default is inevitable, but the way it’s playing out is certainly unique. Greece’s Prime Minister Alexis Tsipras has stood his ground and even called for a referendum on either staying in the euro or pulling out, putting the ultimate decision back in the hands of the Greek people, as it should be.
Interestingly, however, Greece will already be in default before the referendum is held, assuming it misses its debt payment tomorrow, which it probably will. That leaves the referendum, on July 5, as the pivot point for Tsipras.
Should the Greek people decide to stay in the euro, Tsipras will have to be removed from office and new elections held.
If the Greeks decide to leave the euro, Tsipras will have to move forward with crisis management, lead the country out of the euro, back to the drachma, and resuscitate the country.
That’s the short story, for now. But mark my words: Should Greece default tomorrow and should the Greek’s vote on July 5 to stay in the euro, it will merely be kicking the can down the road.
Either Greece leaves the euro now, or does so at some future date.
The most important aspect of the Greek crisis is this …
It’s the beginning of a great sovereign debt crisis that
will soon envelope the western world, eventually taking down
ALL of Europe, then Japan, and finally, the United States.
I’ve been warning about this for some time now, telling everyone who would listen that the next major financial crisis to hit the world would not be a stock market bubble, a tech bubble, or a real estate crisis.
Instead it will be the greatest financial crisis of all, the bursting of the sovereign debt bubble of the massively indebted western socialized governments of Europe, Japan and the United States.
Greece is merely a starting point. Come October, the “Sovereign Debt Big Bang” – as my friend and colleague Martin Armstrong likes to call it – will start to hit with full force …
And it will last for years, probably not peaking until late 2020. The five year crisis that’s coming will change everything you knew about the markets. And if you’re not prepared, it will wipe out most of your wealth.
Fortunately, you are prepared. With my guidance, you will not only be one who survives it, you will thrive as well.
Right now, let’s look at the short-term and how the latest developments in Greece are affecting the markets.
Not surprisingly, the world’s equity markets are getting hit hard. Europe’s stock markets are down as much as 3.2 percent as I pen this issue, while Asia is also getting hit, with China down as much as 3.33 percent.
Our Dow Industrials in pre-open trading fell as much as 300 points, but is rallying back a tad, and now down roughly 180 points.
The dollar, as expected, is taking flight again, as pressure mounts on the euro.
While at the same time, gold is rallying a tad on nervous buying, but has thus far been unable to penetrate even short-term resistance at the $1,183 – $1,185 level.
Other commodity markets seem hardly fazed by the crisis, for now. Crude oil is barely moving, still below key resistance at the $64 level and getting ready for another leg down, while the grain markets are bouncing a tad, but still in severe longer-term bear markets.
Overall, we are positioned nicely for all this. We are short the U.S. stock market with the DXD and SPXS inverse ETFs, we are short the grain markets with July DBA put options, and short gold with the July GLD put options.
We are short mining shares with the DUST ETF, and long natural gas with UNG.
Right now, there are no moves to make. We need to see a day or two of how the market action unfolds, especially as Greece misses it 1.7 billion euro payment tomorrow.
I am watching the markets like a hawk. I will advise on your next move, as soon as it’s time to act.
Stay tuned and best wishes,
Larry
Position Tracker
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